The next health care overhaul? Look to employers

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If the Supreme Court strikes down President Barack Obama's health care law, employers and insurance companies -- not the government -- will be the main drivers of change over the next decade and maybe even longer.

They'll borrow some ideas from Obamacare, and push harder to cut costs.

Business can't and won't take care of America's 50 million uninsured, but for the majority with coverage, here's what experts say to expect:

-- Workers will bear more of their own medical costs as job coverage shifts to plans with higher deductibles, the amount you pay out of pocket each year before insurance kicks in. Traditional workplace insurance will lose ground to high-deductible plans with tax-free accounts for routine medical expenses, to which employers can contribute.

-- Increasingly, smokers will face financial penalties if they don't at least seriously try to quit. Employees with a weight problem and high cholesterol are next. They may get tagged as health risks and nudged into diet programs.

-- Some companies will keep the health care law's most popular benefit so far, coverage for adult children until they turn 26. Others will cut it to save money.

-- Workers and family members will be steered to hospitals and doctors that can prove to insurers and employers that they deliver quality care. These networks of medical providers would earn part of their fees for keeping patients as healthy as possible, similar to the "accountable care organizations" in the health care law.

-- Some workers will pick their health plans from a private insurance exchange, another similarity to Obama's law. They'll get fixed payments from their employers to choose from four levels of coverage: platinum, gold, silver and bronze. Those who pick rich benefits would pay more. It's an approach that Rep. Paul Ryan, R-Wis., the GOP budget leader, also wants to try with Medicare.

"Employers had been the major force driving health care change in this country up until the passage of health reform," said Tom Billet, a senior benefits consultant with Towers Watson, which advises major companies. "If Obamacare disappears ... we go back to square one. We still have a major problem in this country with very expensive health care."

Republican proposals for replacing the health care law will help some businesses and individuals, but aren't likely to solve the problem of the uninsured because of the party's opposition to raising taxes. The GOP alternative during House debate of Obama's law would have covered 3 million uninsured people, compared with more than 30 million under the president's plan.

After the collapse of then-President Bill Clinton's health care plan in the 1990s, policymakers shied away from big health care legislation for many years. Many expect something similar to happen if the Supreme Court invalidates Obama's Affordable Care Act.

Starting in 2014, the law requires most Americans to obtain health insurance, either through an employer or a government program or by buying their own policies. In return, insurance companies would be prohibited from turning away the sick. Government would subsidize premiums for millions now uninsured.

The law's opponents argue that Congress overstepped its constitutional authority by requiring citizens to obtain coverage. The administration says the mandate is permissible because it serves to regulate interstate commerce. A decision is expected in late June.

The federal insurance mandate is modeled on one that Massachusetts enacted in 2006 under then-Gov. Mitt Romney. That appears to have worked well, but it's unlikely states would forge ahead if the federal law is invalidated because health care has become so politically polarized. Romney, the likely Republican presidential nominee, says he'd repeal Obamacare if elected.

That would leave it to employers, who provide coverage for about three out of five Americans under age 65.

"With or without health care reform, employers are committed to offering health care benefits and want to manage costs," said Tracy Watts, a senior health care consultant with Mercer, which advises many large employers. "The health care reform law itself has driven employers, as well as the provider community, to advance some bolder strategies for cost containment."

First, employers would push harder to control their own costs by shifting more financial responsibility to workers.

Data from Mercer's employer survey suggests that a typical large employer can save nearly $1,800 per worker by replacing traditional preferred provider plans with a high-deductible policy combined with a health care account. "That is very compelling," said Watts.

It won't stop there. Many employers are convinced they have to go beyond haggling over money, and also pay attention to the health of their workers.

"As important as it is to manage the cost of medical services and products, and eliminate wasteful utilization, there has been a strong recognition that ultimately healthier populations cost less," said Dr. Ian Chuang, medical director at the Lockton Companies, advisers to many medium-size employers. His firm touts programs that encourage employees to shed pounds, get active or quit smoking.

Employer health plans were already allowed to use economic incentives to promote wellness, and the overhaul law loosened some limits.

A Towers Watson survey found that 35 percent of large employers are currently using penalties or rewards to discourage smoking, for example, and another 17 percent plan to do so next year. The average penalty ranges from $10 to $80 a month, but one large retailer hits smokers who pick its most generous health plans with a surcharge of $178 a month, more than $2,100 a year.

Overall, one of the most intriguing employer experiments involves setting up private health insurance exchanges, markets such as the health care law envisions in each state. Major consulting firms such as Mercer and Aon Hewitt are developing exchanges for employers.

As under the health care law, the idea is that competition among insurers and cost-conscious decisions by employees will help keep spending in check. Aon Hewitt's exchange would open next January, with as many as 19 companies participating, and some 600,000 employees and dependents.

"The concept of an exchange does not belong to Obamacare," said Ken Sperling, managing the project for Aon Hewitt. "We're borrowing a concept that was central to the health care law and bringing it into the private sector. Whether the law survives or not, the concept is still valid."